Estate agent doyen Bill Rawson this week warned agents and home buyers about the perils of buying a property where alterations and additions have not been approved by the local municipality.
Rawson pointed out that private one-off sellers are not governed by the Consumer Protection Act (CPA) and are therefore entitled to sell their properties voetstoots. Voetstoots effectively passes the risk of unapproved plans from the seller to the buyer on transfer. The buyer of a voetstoots property would have to resort to expensive court action if the buyer wanted to claim damages from the seller.
However, Rawson warned that the situation is much more tricky for estate agents who are governed by the CPA – because they facilitate the sale of the property in the course of their normal business. Rawson says agents could be held accountable for not educating and informing the seller and purchaser of the potential liability of not ensuring municipal building compliance.
Rawson said prospective purchasers should insist on seeing a copy of the approved plans before signing any sale documents and should use an architect or a building inspector to check the plans against the existing buildings.
John Graham CEO of home inspection company HouseCheck says he agrees with Rawson and for this reason HouseCheck routinely offers a visual comparison of the plans with the “as built” structures as part of its home inspection services. He says the seller or the buyer has to provide the HouseCheck inspector with a copy of the plans in order for HouseCheck to make the comparison. HouseCheck does not itself obtain plans from the local municipality.
Graham points out that unapproved plans are only one of the serious risks which effectively pass from seller to buyer with a voetstoots property sale. He says defects in the house structure – roof leaks, damp or cracks for instance – or unsafe or illegal geysers or electrical or plumbing or gas installations also effectively become the buyer’s problem once a voetstoots sale has gone through.
Graham also agrees with Rawson that estate agents can be held accountable under the CPA for not educating and informing the buyer of potential liabilities and risks. Graham says the underfunded and under-resourced Consumer Protection Commission has yet to effectively flex its muscles as regards the liability of estate agents to properly educate and inform buyers as to potential risks. But he says it is only a matter of time before there is a test case and the estate agent’s liability to educate and inform buyers is routinely enforced.
Graham says more and more estate agents are advising their buyers to make the sale contingent on a home inspection.
Rawson said if a buyer only later finds out that the purchased property does not comply with the approved plans it may then be necessary for the buyer to employ an architect or a draftsperson to draft the plans of the house as it is now and to submit the “as built” plans to the municipality for approval. Rawson warns that the new owner may also be liable for a fine for owning a non-compliant building, or may even have to demolish parts of the building.